In a business climate fraught with constant change, corporate
layoffs have become a common business practice. For many
corporations, outsourcing business functions is more cost-effective
than handling them internally. At the same time, new technology is
allowing big business to replace bodies with machines, robbing
workers of their jobs. And with the bottom line often the top
priority, profit-driven job cuts are now in vogue.

As more workers continue to fall off the corporate ladder, many
displaced executives are discovering only one way to land on their
feet: become an entrepreneur. Challenger, Gray & Christmas, a
Chicago-based corporate outplacement company, estimates the number
of layoff victims who have turned to entrepreneurship has roughly
doubled in just two years, ballooning from 6 percent to 8 percent
in 1993 to 12 percent to 15 percent in 1995.

While the rate of layoffs slowed between 1993 and 1994,
economists acknowledge layoffs are still continuing at a much
higher pace than was the case a decade ago-and there's even
been a slight acceleration in layoffs in recent months. Overall,
economists believe not only is this phenomenon likely to continue,
but also that, in part, its effects will be more far-reaching than
in years past.

"What is different about the last few years is that job
instability is creeping up the ladder," says Robert Solow,
professor of economics at Massachusetts Institute of Technology
(MIT) in Cambridge. "It's moving from blue-collar and
clerical workers to include managerial people and even some
technical people."

What's also unsettling about today's round of cutbacks,
say economists, is that unlike the series of layoffs in the 1980s,
which was largely concentrated in the automotive, steel and rubber
industries, '90s-style layoffs are occurring in industries
across the board.

"What's going on now is that it's happening more
broadly and more frequently," explains Ken Goldstein, an
economist at The Conference Board, a New York City economic
research firm. The reason? "There's more emphasis on
achieving and maintaining a competitive edge in a globally
connected and intensely competitive environment."

Economists agree cutbacks will continue in industries facing
stiff international competition or deregulation, or undergoing
rapid change. They point to such fields as telecommunications,
computers, insurance and banking as particularly vulnerable.

A spate of mergers in recent months is feeding the trend as
well. According to Challenger, Gray & Christmas, a whopping
$866 billion worth of mergers took place in the United States last
year, setting a new record; these mergers resulted in more than
72,000 layoffs. And there's no sign of any slowing: By the
first quarter of this year, there had already been $208 billion in
mergers.

Take all these factors into consideration, says Goldstein, and
this unstable business climate is here to stay well into the
foreseeable future. "The competition big business faces today
isn't going to get any better in the next five or 10
years," he contends. "If anything, it'll get even
more intense. The very factors that drove [corporations] to do what
they did in the early '90s will still be there [in the future].
Not only are things unlikely to change in the next five or 10
years; they're not likely to change in the next 50."

That's hard news to swallow for many corporate employees-but
news that must be accepted nonetheless. "I think the general
public still has the sense that once this [layoff trend] is over,
it'll all go back to normal," says Dixie Darr, editor and
publisher of The Accidental Entrepreneur, a Denver-based
newsletter for downsized-execs-turned-entrepreneurs. "But
today, this is business as usual. There's just a lot of change
going on, and it's going to continue."

Hats Aplenty

Armed with ample management experience, years of industry
knowledge and a vast array of contacts, corporate executives are
leaving their corner offices-whether by choice or by force-to start
their own businesses. Despite the decidedly different working
conditions, the rewards, they say, are vast.

While Solow estimates most executives who are laid off land
their next jobs at salary levels about

15 percent lower, the earnings potential for entrepreneurs is
much higher. Plus, owning a business allows ex-execs to use their
existing skills, remain in positions of authority, and work in an
environment free of the fear that today's the day they'll
be handed a pink slip.

Even so, after deciding to jump off the corporate track,
executives who don entrepreneurial hats often have their work cut
out for them, say experts. One of the biggest hurdles they must
learn to overcome? Moving from a narrowly defined job focus into
that all-encompassing role of entrepreneur.

"The people who are really good at working in corporate
life are going to have trouble adjusting to being on their
own," says Darr. "They have to get used to being
responsible for doing everything themselves because most
[entrepreneurs] start out on their own or with very few
[employees]."

David Keillor can vouch for the adversity that comes with
emerging from the corporate cocoon. After 30 years working for IBM
in Rochester, Minnesota, the senior engineer says he "saw the
writing on the wall" and accepted a buyout package in July
1993. Less than a week later, he and his wife, Ina, 57, and two
other ex-IBMers started Technology Concepts Inc., a software
company that develops multiple listings software for the real
estate industry. While starting a business in the computer industry
was a natural move for him, Keillor says, juggling such a vast
array of responsibilities, frankly, wasn't.

"In a small company, you truly wear a lot of hats,"
admits Keillor, 56, whose company brought in $180,000 in 1995.
"Everything from business plans to purchasing a telephone
system to stocking supply cabinets and ordering furniture was
challenging. It was something I initially wasn't used
to."

Rather than calling someone to fix problems or purchase
equipment the way he had at IBM, Keillor says he was stuck dealing
with "1,001 little things that added up to big stuff."
His strategy for coping? Jump in feet first. In the start-up phase,
Keillor chose to assume much of the burden of daily operations,
while the other founders handled the technical and human resources
aspects of the business. Thankfully, now that the company is on
more solid ground, Keillor is slowly beginning to delegate.

"At least I don't have to vacuum the floor
anymore," Keillor laughs. "We just hired
someone."

Lonely At The Top

During the start-up phase, ex-execs often get caught up in the
millions of details involved in getting their businesses off the
ground. Yet once the venture is up and running, many find the
novelty of being on their own begins to wear thin. Loneliness, says
Darr, is a common grievance among former executives who pursue
entrepreneurial avenues.

"I had to get used to not having the social interplay with
people on a regular basis," says Wanda Schiele, owner of
Celebrate All People, a leadership and diversity consulting firm in
Aurora, Colorado.

Unsatisfied with the technical emphasis her job as project
manager with US West had taken on (and two years short of full
retirement), Schiele accepted a partial buyout package in October
1993, after 23 years with the company. She sank $5,000 into
computer and telecommunications equipment, contacted past clients,
and even did a lot of free jobs to get started. Still, business was
slow. And while she appreciated the free time and the chance to
visit more with her grandchildren, Schiele, 54, missed the frequent
social activity she'd enjoyed as a trainer in a bustling
corporate environment.

Business has since picked up, but Schiele still makes a
concerted effort to reach out for human contact on a regular
basis-an effort, she says, she didn't have to make when working
in a large corporation. For instance, she frequently meets people
for lunch, attends networking events and rekindles old business
friendships. Says Schiele, "I have learned to search out
people for social interactions in a way I didn't have to
before."

You're The Expert

A natural move for many execs-turned-entrepreneurs is to start a
consulting business. With years of industry experience under their
belts, plus the added attraction of low start-up costs, becoming a
consultant is often the most obvious choice. However, experts warn
it's not always the smartest choice.

"There are so many people today who call themselves
consultants and come from a large corporate environment that
it's an extremely crowded field right now," says Molly
Thorpe, chair of the executive committee of the Caltech/MIT
Enterprise Forum and owner of Thorpe Associates, a Canoga Park,
California, business planning consulting firm. "Any consultant
who starts out today has a real tough time of it."

What are the most effective ways consultants can compete?
Develop an area of specialization, advises Thorpe. "As an
independent consultant, you have to have a specialty and not say
you do everything," she says. "Too many consultants say
they do 20 things, and maybe they do, but when people think of
them, it's too unfocused."

Still, even specialized consultants are likely to run up against
challenges. For example, while Schiele's focus is quite narrow
(she chose cultural diversity and leadership management training),
she's found plenty of competition in her field. In fact, she
admits sometimes her focus can be somewhat limiting.

"It's been rewarding and a struggle at the same
time," Schiele confesses. "I'm able to do what's
important to me, but there's a real glut of diversity
consultants. I don't get as much business as I'd like, but
at least I'm doing what I want to do."

Having an alternative means of financial support is an important
consideration before launching a consulting venture, says Thorpe.
In addition, consultants are more likely to succeed if they've
researched their target markets ahead of time and tried to find
ways to serve them. Possessing a healthy dose of patience while
building your credibility and establishing your client list is
vital as well.

Above all, be prepared to put on your sales hat and promote
yourself. "You have to learn to market yourself, and a lot of
former executives aren't comfortable with that," says
Thorpe.

Somewhat uneasy in a sales role, Schiele hired a broker early on
to make contacts and set up meetings with new clients. Says
Schiele, "The broker really makes the whole process a lot
easier."

Silver Lining

While corporate workers are continuing to be laid off with a lot
of economic and emotional pain, some still see a silver lining to
this troublesome story. For one, as more executives explore
entrepreneurship, many are getting a chance to finally pursue a
lifelong dream. Technology Concept's Keillor, for instance,
always yearned to start a business of his own-he just never had the
right opportunity. Likewise, he says, as many of IBM's
casualties continue to open their own companies, scores of them are
finding a whole new world of possibilities.

"In the short term, [the layoffs were] very painful to the
Rochester community," Keillor admits. "But in the long
term, I think it took a lot of underutilized talent and unleashed
it. Putting [that talent] out on the streets is going to be one of
the best things to ever happen to Rochester economically."

Darr agrees that while many former executives start businesses
out of necessity, others discover they were cut out for
entrepreneurship all along. "Once they start a business, they
realize they should have done it earlier," she says.

Out of a bad situation, it seems, has sprung a new legion of
entrepreneurs. No longer content to take their unfavorable job
situations sitting down, countless corporate workers who've
been laid off, downsized or bought out are now seizing control and
striking out on their own. As Darr puts it, "There's just
a kind of entrepreneurial fervor that's gripped the whole
country."